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Do Chinese Dual-listed Companies "Return with Glory" in Their Mainland IPOs ?

Zhao, Wenxin LU and Lang, Kangni LU (2019) NEKN02 20191
Department of Economics
Abstract
Dual-listing has become a popular approach for companies to seek funding and international expansion. Typically companies grow big from less developed domestic markets and march into developed markets. However, China, as an emerging market economy has witnessed a wave of Hong Kong-listed companies returning to the mainland for a second IPO. One primary assumption for companies’ motivation to return is that these companies are perceived as "Return with glory". The good reputation leads to positive market reactions. This paper focuses on the effect of mainland IPOs for dual-listed Chinese companies, and to provide statistical proof to the general assumption. Using a difference-in-difference method, we derive the results that companies... (More)
Dual-listing has become a popular approach for companies to seek funding and international expansion. Typically companies grow big from less developed domestic markets and march into developed markets. However, China, as an emerging market economy has witnessed a wave of Hong Kong-listed companies returning to the mainland for a second IPO. One primary assumption for companies’ motivation to return is that these companies are perceived as "Return with glory". The good reputation leads to positive market reactions. This paper focuses on the effect of mainland IPOs for dual-listed Chinese companies, and to provide statistical proof to the general assumption. Using a difference-in-difference method, we derive the results that companies returned for a mainland IPO have received a less negative market response than companies only issue seasoned equity offerings in Hong Kong. Next, an event study illustrates insignificant positive abnormal returns for returned companies, but a significantly negative abnormal return for the ones only raised funds in Hong Kong. The above two parts gave us a unified conclusion: For Hong Kong-listed Chinese companies, a mainland IPO introduces positive market reaction, which motivates more companies to choose a mainland IPO over Hong Kong SEO to meet future funding needs. (Less)
Please use this url to cite or link to this publication:
author
Zhao, Wenxin LU and Lang, Kangni LU
supervisor
organization
course
NEKN02 20191
year
type
H1 - Master's Degree (One Year)
subject
keywords
Dual-listing, Market segmentation, Stock return, Event study, Cumulative abnormal return
language
English
id
8980640
date added to LUP
2019-08-08 10:28:21
date last changed
2019-08-08 10:28:21
@misc{8980640,
  abstract     = {{Dual-listing has become a popular approach for companies to seek funding and international expansion. Typically companies grow big from less developed domestic markets and march into developed markets. However, China, as an emerging market economy has witnessed a wave of Hong Kong-listed companies returning to the mainland for a second IPO. One primary assumption for companies’ motivation to return is that these companies are perceived as "Return with glory". The good reputation leads to positive market reactions. This paper focuses on the effect of mainland IPOs for dual-listed Chinese companies, and to provide statistical proof to the general assumption. Using a difference-in-difference method, we derive the results that companies returned for a mainland IPO have received a less negative market response than companies only issue seasoned equity offerings in Hong Kong. Next, an event study illustrates insignificant positive abnormal returns for returned companies, but a significantly negative abnormal return for the ones only raised funds in Hong Kong. The above two parts gave us a unified conclusion: For Hong Kong-listed Chinese companies, a mainland IPO introduces positive market reaction, which motivates more companies to choose a mainland IPO over Hong Kong SEO to meet future funding needs.}},
  author       = {{Zhao, Wenxin and Lang, Kangni}},
  language     = {{eng}},
  note         = {{Student Paper}},
  title        = {{Do Chinese Dual-listed Companies "Return with Glory" in Their Mainland IPOs ?}},
  year         = {{2019}},
}